Liechtenstein – known for its highly qualified financial services – is a pioneer in handling new technologies.
The government of Liechtenstein has recognised the great future potential of technologies like blockchain not only for the financial sector, but also for transactions in other branches. Therefore, as one of the first countries to do so, Liechtenstein published a draft of a unique law on transactions systems based on trustworthy technologies (TT), called the Blockchain Act for short, in November 2018, and it is to be submitted to parliament this year. It was developed in close collaboration with enterprises working mostly with these technologies, and with the financial market authority.
With this act Liechtenstein sets the following goals:
To protect users of TT systems and to secure their trust in digital rights:
Fundamental terms are defined, giving details of the basic information to be published to obtain certification, and specifying who has full legal title to a formally defined “Token”.
To ensure a minimum level of quality of TT service providers:
The service providers are defined, with regulations governing those TT providers who have to be registered, and they are scrutinised to ensure that intermediate keys and assets are not part of the bankruptcy estate.
To enable foreign TT service providers to submit themselves voluntarily to the regulations of the Blockchain Act:
Foreign TT providers can avail themselves of the opportunity to register for future seals of approval or for seals that have already been issued, to increase transparency and legal certainty.
To create a legal base for current TT and for future technologies:
The Blockchain Act is designed to react quickly to any new technologies that are not yet foreseen.
To maintain a balance between regulating TT and keeping the advantages it enjoys from self-regulation.
Thomas Hosp LL.M., tax advisor and auditor, ECOVIS Kanzlei Mag. Thomas Hosp, Schaan, Liechtenstein
This draft law, which has won an award even before it has been passed, creates transparency and legal clarity with respect to transaction systems based on blockchain technology.
The Blockchain Act provides the appropriate framework, but nevertheless the general conditions of many connected laws have to be recognised by enterprises working with TT, depending on the underlying transaction. The respective legal aspects must be observed when establishing a company and in some cases specific reports are required to be made to the financial market authority and a business licence is necessary. The next step is to clarify whether and where profit tax and VAT have to be paid and the regulations of the Due Diligence Act have to be respected to avoid accusations of money laundering and other criminal activities.
We are convinced that TT-based transactions will play an important role in business life, and, in the opinion of Ecovis’ experts, Liechtenstein has created the best basis for the future needs in this sector with its Blockchain Act.
This draft law has already been recognised internationally. Liechtenstein won the “2018 Blockchain Ecosystem of the Year” award from The Crypto Challenge Forum London.